Executive Summary

Net income of $4.6M and diluted EPS of $0.85 in Q4 2024, up from $3.2M and $0.59 in Q4 2023, driven by higher loan balances and reduced cost of funds; NIM (FTE) improved to 3.21% from 2.89% YoY .
Loans grew 13.1% YoY to $1.236B, deposits rose 3.2% QoQ, borrowings fell materially; credit quality remained strong with NPA at 0.19% of assets .
Noninterest income benefited from a $0.525M gain on early debt redemption; efficiency ratio (FTE) improved YoY to 60.2% despite incentive-related compensation expense increases .
Management emphasized focus on loan growth and cost discipline; Board declared a $0.33 dividend for the quarter (maintained in subsequent February 2025 declaration) .
Wall Street consensus estimates from S&P Global were unavailable for Q4 2024; no earnings call transcript was published on the company IR site or typical sources, limiting estimate and Q&A comparisons [Internet: https://ir.vnb.com/financials/quarterly-results/default.aspx].

What Went Well and What Went Wrong

What Went Well

Strong loan growth: “We increased loan balances 13% over the prior year while decreasing our overhead costs” — Glenn W. Rust, President & CEO .
Cost of funds declined in 2H24; overall cost of funds fell to 1.94% in Q4 from 2.01% in Q4 2023 and cost of borrowings declined to 4.33% from 5.35% YoY, supporting NIM expansion .
Asset quality stable: NPA as % of assets improved to 0.19% in Q4 2024 from 0.33% in Q3 2024; loans 90+ days past due still accruing fell sharply QoQ (to $0.754M, largely government-guaranteed) .

What Went Wrong

Effective tax rate rose to 22.0% in Q4 (vs. 16.6% in Q4 2023) due to adoption of proportional amortization method for low-income housing tax credits, pressuring net income vs. pre-tax growth .
Compensation and professional services costs increased 5.8% YoY given lender incentives for production and higher service costs, partially offset by lower data processing expense (contract negotiations) .
Full-year net interest margin (FTE) compressed to 3.10% from 3.36% driven by higher deposit costs; full-year efficiency ratio (FTE) worsened to 62.0% vs. 58.3% in 2023 despite quarterly improvements in 2H24 .

Financial Results

Metric	Q4 2023	Q2 2024	Q3 2024	Q4 2024
Interest & Dividend Income ($USD Millions)	$18.074	$18.663	$19.406	$19.298
Net Interest Income ($USD Millions)	$10.753	$11.181	$12.024	$12.235
Diluted EPS ($USD)	$0.59	$0.77	$0.85	$0.85
NIM (FTE) %	2.89%	3.04%	3.24%	3.21%
Efficiency Ratio (FTE) %	64.0%	62.7%	58.6%	60.2%
ROAA % (annualized)	0.79%	1.05%	1.15%	1.12%
ROAE % (annualized)	9.03%	11.07%	11.44%	10.98%

KPI	Q4 2023	Q2 2024	Q3 2024	Q4 2024
Loans, net of deferred fees ($USD Millions)	$1,092.665	$1,158.214	$1,215.512	$1,235.969
Total Deposits ($USD Millions)	$1,409.098	$1,373.841	$1,379.903	$1,423.546
Loan-to-Deposit Ratio %	77.5%	84.3%	88.1%	86.8%
NPA as % of Total Assets	0.17%	0.25%	0.33%	0.19%
Non-accrual Loans ($USD Millions)	$1.852	$2.365	$2.113	$2.267
Loans 90+ Days Past Due, accruing ($USD Millions)	$0.880	$1.596	$3.214	$0.754
ACL to Gross Loans %	0.77%	0.69%	0.70%	0.68%

Segment breakdown: Not applicable (no segment reporting disclosed in the releases) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Quarterly cash dividend per share	Q4 2024	$0.33 (Q3 maintained)	$0.33 declared/paid in Q4	Maintained
Quarterly cash dividend per share	Q1 2025 (post-Q4)	$0.33	$0.33 declared Feb 26, 2025	Maintained

No explicit quantitative guidance ranges (revenue, margins, OpEx, tax rate, etc.) were provided in the Q4 release/8-K .

Earnings Call Themes & Trends

Earnings call transcript was not available; themes reflect management commentary across press releases.

Topic	Previous Mentions (Q-2: Q2 2024)	Previous Mentions (Q-1: Q3 2024)	Current Period (Q4 2024)	Trend
Cost of funds	Stabilized in 1H24; overall cost of funds 2.10% in Q2	Cost of funds steady through 9M24; interest-bearing deposits cost 2.71%	Declining in 2H24; overall cost of funds 1.94% in Q4; borrowings cost down to 4.33%	Improving
NIM (FTE)	3.04% in Q2, up vs Q4 2023	3.24% in Q3	3.21% in Q4 (slight sequential dip, strong YoY)	Up YoY, flat to slightly down QoQ
Loan growth & gov’t-guaranteed mix	Loans +6% YTD; purchases of USDA/SBA portions; gov’t-guaranteed +$130.2M since 6/30/23	Loans +11.2% vs YE; gov’t-guaranteed +$141.3M YoY	Loans +13.1% YoY; gov’t-guaranteed +$108.6M YoY; ACL % declines reflect guarantee	Strong growth; guaranteed mix rising
Securities repositioning	Securities down $137.6M since YE; redeployed to loans, reduced borrowings	Securities down $141.9M vs YE; redeployed to loans	Securities down $159.3M vs prior YE; redeployed to loans	Ongoing redeployment
Credit quality	NPA 0.25% of assets; non-accrual $2.365M	NPA 0.33%; non-accrual $2.113M	NPA 0.19%; non-accrual $2.267M; 90+ days largely guaranteed	Solid, improved QoQ
Noninterest income	Lower YoY due to absence of prior BOLI proceeds; fees down	Lower YoY; absence of prior BOLI proceeds	Gain on early debt redemption $0.525M offsets lower fees	Mixed; one-time gain in Q4
Tax rate	18.3% (below statutory)	18.5% (below statutory)	22.0% (above statutory) due to LIHTC proportional amortization method	Higher due to accounting change

Management Commentary

“During 2024, we focused on loan growth and reducing ongoing operating expenses… We increased loan balances 13% over the prior year while decreasing our overhead costs. Our credit quality metrics continue to be strong, along with our capital and liquidity positions.” — Glenn W. Rust, President & CEO .
Q3 emphasis on expense discipline: “Our measures to reduce ongoing overhead costs are paying off… we continue to put new loans on the books” — Glenn W. Rust .
Capital returns: $0.33/share dividends declared in Q4; no repurchases in 2H24 (20,350 shares repurchased YTD at $27.42 average earlier) .

Q&A Highlights

No earnings call transcript was available in company IR or typical aggregators; Q&A highlights and clarifications were therefore not accessible for Q4 2024 [Internet: https://ir.vnb.com/financials/quarterly-results/default.aspx].

Estimates Context

S&P Global consensus estimates for Q4 2024 EPS and revenue were unavailable due to access limitations; therefore, beat/miss analysis versus Wall Street consensus cannot be provided for this quarter [GetEstimates error; Values from S&P Global were unavailable].
Given the microcap nature and limited analyst coverage, third-party estimate publications were not used; our policy is to anchor comparisons on S&P Global.

Key Takeaways for Investors

NII and EPS growth were supported by strong loan growth and declining cost of funds in 2H24, with NIM (FTE) up materially YoY; watch for continued funding cost relief to sustain margin trajectory .
Credit quality remains robust with low NPA and declining 90+ day past-due balances (largely government-guaranteed), mitigating credit risk pressures as the loan book expands .
ACL ratio drifted lower due to mix shift toward government-guaranteed loans; investors should monitor guarantee mix and economic conditions for any reserve recalibration needs .
Q4 noninterest income included a $0.525M gain on early debt redemption; do not extrapolate this item into run-rate earnings; fee income trends remain softer YoY .
Efficiency improved YoY in Q4 but compensation and services costs rose; sustained expense discipline will be key to maintaining sub-60% FTE efficiency ratios amid growth .
Deposits increased QoQ; ICS balances rose sequentially, supporting liquidity and broader customer coverage without brokered deposits — a positive funding signal .
Dividend maintained at $0.33/share (reaffirmed Feb 2025); with borrowings reduced and capital ratios strong, capital returns look steady, pending macro and credit developments .

Sources: Q4 2024 press release and 8-K, plus Q2 and Q3 2024 releases/8-Ks: [Internet: https://ir.vnb.com/financials/quarterly-results/default.aspx].

Virginia National Bankshares Corp (VABK)·Q4 2024 Earnings Summary